Recruiting Collusion among Top Silicon Valley Companies

Yesterday the US Department of Justice announced a proposed settlement against Apple, Google, Intel, Adobe, Intuit, and Pixar for colluding not to “cold-call” recruit employees from each other.

Consider the implications of this practice:   HR and business leaders at these these leading silicon valley companies sat together and agreed “if you don’t poach my people I promise not to poach yours.”   While it may seem like good business practice among these companies, the whole concept of this restrains competition and free trade in employment.

Here is what the Department of Justice release states:

According to the complaint, the six companies entered into agreements that restrained competition between them for highly skilled employees.   The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel prevented the companies from directly soliciting each other’s employees.   An agreement between Google and Intuit prevented Google from directly soliciting Intuit employees.

“The agreements challenged here restrained competition for affected employees without any procompetitive justification and distorted the competitive process,” said Molly S. Boast, Deputy Assistant Attorney General in the Department of Justice’s Antitrust Division.   “The proposed settlement resolves the department’s antitrust concerns with regard to these no solicitation agreements.”

In the high technology sector, there is a strong demand for employees with advanced or specialized skills, the department said.   One of the principal means by which high tech companies recruit these types of employees is to solicit them directly from other companies in a process referred to as, “cold calling.”   This form of competition, when unrestrained, results in better career opportunities, the department said.

The bottom line on this behavior is that it may be illegal, and is ultimately bad business.  While it may be common in many industries, it demonstrates a lack of understanding for the way talent markets work.   The only way an organization can attract, retain, and engage high performance employees is through their own strategic management practices.  If you understand the power of employment branding, coaching, career development, incentives, and other factors which drive engagement, such collusion is not necessary.

Our research on employee engagement (the passion and commitment of employees to your organization) shows clearly that the keys to maintaining top people are difficult but business-critical management practices:

• Creating an empowered work environment which lets people contribute and innovate
• Providing career development and stretch assignments for high performers
• Developing a management culture of coaching and development, not only pushing for more output
• Encouraging positive talent mobility in the organization, and penalizing the hoarding of top talent
• Creating a collaborative environment where people can share ideas openly without fear
• Providing financial incentives which are appropriate to the contribution
• Clarifying decision-making so people know how and why decisions are made
• Being crystal clear on your values and culture, and attracting and hiring only those who “fit”
• Having a top leadership team that understands the important of talent, not just product and competitive success.

I have many friends who have worked for some of these companies, and they are not always easy places to work.  These are highly competitive, innovative, driven organizations which develop incredible products and services.  But without a strong focus on talent, even these kinds of practices will not prevent top people from finding another place to work.

For more on this topic, read our exciting new research on High-Impact Learning Culture, which proves that management and leadership culture are one of the biggest drivers of business success.

You can read more about this story in the San Jose Mercury News analysis.